[XMR] Monero Speculation

[kurious]

^^
I think this is because XMR is younger than the BTC and we expect (I know, long shot) to reach it in popularity. Besides, there are no trolls in here which is very comforting when you're trying to educate yourself price-wise or tech-wise. Admittedly, XMR feels like "the future" into my mind now. I personally managed to build a nice stash (ie: so many I won't regret the BTCs spent if it goes to 0 and so many that I'd thank myself I bought them if it goes to "da moon").

Feels like a breath of fresh air here, yes - and Monero is young with all the potential upside that implies.

Of late, BTC has been a drudge, post the euphoric bubble rise of 2013.  I am still heavily in, but less concerned as I was about switching a reasonable % of my stash into XMR.   I have enough BTC to make a life changing difference if it indeed rises to its full potential - mostly in cold storage.

However, having not been into BTC until early 2013, the feeling that I am able to accumulate far more here at the early stage has a strong appeal.

I am about 30 to 1 in terms of XMR - BTC, which is not too much to lose in a wipe out, but has a huge upside if Monero achieves only a proportion of its potential.

The Black Swan of BTC collapse and general crypto chaos in the near term is factored in - but with so much infrastructure in place now, I think this is so minimal as to be dismissible.

TLDR:

Sun's out, future is bright.

Aight, so to reuse a phrase, is it true that the whole bitcoin bubble was artificial bot driven with fake USD? If thats the case, there's no actual reason for bitcoins meteoric 2013 spike and thus the true valuation of any cryptocurrency is still up in the air with absolutely no points of reference.

I just don't understand: if the price spike of BTC was fake, we should really stop referring to it as real.

Good point - but no one really knows the 'real' price of cryptos in general - we can but look at the market price.

[aminorex]

The blow-off top of a bubble can not provide much if any information about fundamental value, regardless of the peculiar form of the madness.  Taking away a negligible amount of information cannot materially diminish the remainder, so no worries.

[rpietila]

The full potential of crypto is the replacing of fiat.

If we suppose that TPTB does not embrace private crypto, it is not likely that people who serve them will embrace it. This reduces the potential by 99%, yet leaves 1%.

That 1% is however wealthier on average, let's say 100k USD per person (world wealth divided by people is about 50k). From my own experience, holding ~50% of net worth in crypto is very much in the comfort zone. So that makes it 50k * 70 million = 3.5 trillion USD of wealth to be stored in private crypto.

The interesting thing is the process: as these people buy in, the old world money comes to people that already are in the new economy, increasing their wealth. With the wealth effect factor of 4...10 as previously postulated, we can conservatively estimate that 10 trillion USD marketcap would correspond to the dynamic "end state" where all people who want the new money have totally converted into it.

That would make about 500,000 USD/XMR.

This is the potential. The potential is not to beat DRK or beat BTC. It is to become free of debt money slavery, together.

I think it is not an unrealistic goal. If this is not the goal, why are you wasting your time?  

[jehst]

"Real economy" as a predictor of the value of a "money" is a total fallacy.

Study gold. It does not have an appreciable real economy, and measuring its flows is difficult and obscure based on the paper gold charade.

Same with XMR, or BTC. The market cap is based on the willingness of people to hold. As with gold, I actually could not care less if it is directly spendable. Perhaps I have to say it again, since it is important: I could not care less if I can spend my BTC/XMR on stuff.

As long as it is alive, it has value, and then it has a price, and then I can hoard/dishoard it. That's it. By definition, I can always do what I want. If it is better value to convert XMR to another form before spending it for goods/services, it is just a practicality. If I can pay directly, it is just a practicality. Either way, it does not really affect my propensity to hold, and holding (alone) gives money its value.

I believe the qualities of XMR are such that when people just learn about it, they are willing to hold it. The more they hold, regardless of wallets, regardless of spending opportunities, the higher the market cap.

The "store of value" market is the ultimate prize. Once you capture it, as gold has, you don't need any economic activity at all. Then you become king.

But we're not anywhere close to that with bitcoin or XMR.

I agree that the real economy of a commodity (or fixed supply asset) is a poor predictor of price. But it becomes important when people are universally, irrationally dumping their gold into the ocean, which is what is happening with cryptocurrencies currently. This is the only time that I look to their real economies to judge where the "quantum foam" basement level is. XMR needs people to hold it, but it will always be held by someone. There's no question about whether someone's holding. The question is how many people want to hold versus the available supply. If no one much wants to hold (besides those who are already holding), we must look to those who need to hold.

[jehst]

Aight, so to reuse a phrase, is it true that the whole bitcoin bubble was artificial bot driven with fake USD? If thats the case, there's no actual reason for bitcoins meteoric 2013 spike and thus the true valuation of any cryptocurrency is still up in the air with absolutely no points of reference.

I just don't understand: if the price spike of BTC was fake, we should really stop referring to it as real.

People really were buying and selling $1000 bitcoins all around the world whether the trigger was fake or not. I don't care what triggers the next BTC/XMR rise. It could be totally artificial. If a group of people build an artificial lake, and you take a fish from it, do you say "This lake isn't real. Why are we referring to it as real"?
No, the water is real and the fish is real. You just enjoy the fish.

Let the documentary-makers of the future worry about the narrative.

[rpietila]

The "store of value" market is fragmented. Diamonds also occupy a corner, despite several drawbacks such as unusability in street trade, 30% spread in stores, etc.

The few good points in diamonds are good value/weight ratio (yet worse than crypto) and that there is a cartel that regulates supply keeping them not depreciating in value more than paper money does.

I was thinking of purchasing diamonds years ago, but opted on gold to supply that need (I am not that rich). Now I hardly have any gold because BTC fulfills the need better. The thinking is all the time going on, as BTC becomes more regulated, it is soon not suitable as an all-around money, and XMR may take that role. There is no competitor at present, and if one comes, it's 1+ year behind which is a lot.

Like I said in the previous post, this is a winning position. Just let it play out.

[Anon136]

My Long-Term Outlook:

Bulls are unable to protect $300 BTCUSD or $1 XMRUSD price levels. Now XMR and BTC must look to their "real economies" (non-speculative uses) as baseline support. Because XMR and BTC both have double-digit supply inflation, their real economies must expand at a triple-digit rate to safely overcome supply inflation. Let's look at the real economies.

XMR's real economy is driven mostly by Crypto-Kingdom.
BTC's real economy is driven mostly by Silk Road's descendants. (NOT Coinbase, Bitpay, Dell, Microsoft -- they don't soak up supply. They juggle bitcoins and then throw them back onto the market.)

Silk Road's descendants are not transparent so it is difficult to measure this economy's expansion. We can see that the number of listings has increased, but not at triple-digit rates. Crypto-Kingdom is more transparent. Its growth is good, but maintaining a triple-digit growth rate of players and economy will be difficult. Without the bulls on our side, we have to prepare for a long, drawn-out decline to baseline support, where almost no one wants BTC and XMR except for Silk Road users and Crypto-Kingdom players. Where they are the only people standing between oversold price levels and oblivion.

In 2021, the inflation situation will be reversed. Bitcoin and Monero's supply inflation will be down to single-digits (closer to 2-3%), but their real economies will likely be expanding at double-digit rates. Sometime between 2015 and 2021, the pin will drop. We don't need to defeat the bears. We only have to survive them.

There is a pretty good chance that monero will take over a good portion of what you are calling the "real economy" of btc.

Aye, there is. But by then, the pie will be much bigger. The real economies of both BTC and XMR will be much more than a small handful of enterprises.

Maybe. But even if that isnt the case. Even if the whole pie shrinks, even if the total use cases shrink, if monero takes over a good portion of bitcoins dark market utility, we could be looking at sizable returns. Just by virtue of the fact that monero is so much less capitalized than bitcoin.

I would like to believe that dark net market administrators and customers would be quick to adopt new, superior alternatives. Unfortunately, humans are creatures of habit and often won't change unless forced to change. People are in the habit of using BTC and in the habit of using centralized, trust based marketplaces. We see that the dark net market rouges are very slow to adopt multisig transactions, very slow to adopt XMR, and very slow to try Open Bazaar. If I had to make a bet, I would bet that they'll still be doing the same thing years from now that they are doing today. In other words, I wouldn't peg my hopes on them being smart enough and forward looking enough to do what's in their best interests by using XMR. Some may be drawn to DASH, which may survive or even thrive for many years before the occurrence of a systemic meltdown event.

Dark net market activity is not part of XMR's real economy and may never be. Luckily for XMR, there are hundreds of millions of dollars worth of legal opportunities for XMR: offshore banking, cross-border corporate transactions, tax avoidance (not evasion),  online gambling, porn and any and all ordinary transactions where privacy is desired. The space into which XMR can expand has a trillion dollar ceiling. We don't need to worry about the ceiling. For now, Crypto Kingdom is here and it's real.

Great post. I agree with everything that i know enough about to comment on. Though we might be pleasantly surprised. Especially if there is a catalyzing event such as people being kidnapped by the state as a result of block chain analysis.

[darlidada]

Great post. I agree with everything that i know enough about to comment on. Though we might be pleasantly surprised. Especially if there is a catalyzing event such as people being kidnapped by the state as a result of block chain analysis.

Wow. Is that something that big bitcoin holders actually fear ?

[Anon136]

Great post. I agree with everything that i know enough about to comment on. Though we might be pleasantly surprised. Especially if there is a catalyzing event such as people being kidnapped by the state as a result of block chain analysis.

Wow. Is that something that big bitcoin holders actually fear ?

I don't know about the big holders. But I would definitely fear it if i were running a dark market business or a dark market customer.

[binaryFate]

Was at "DevCore London" bitcoin conference. Quite some mentions of privacy concerns, more than before as far as I can tell. Surprisingly knowledge of privacy cutting edge technics stops at "coinjoin", even for *very* famous bitcoin devs.

[Erik Goff]

Great post. I agree with everything that i know enough about to comment on. Though we might be pleasantly surprised. Especially if there is a catalyzing event such as people being kidnapped by the state as a result of block chain analysis.

Wow. Is that something that big bitcoin holders actually fear ?

I don't know about the big holders. But I would definitely fear it if i were running a dark market business or a dark market customer.

it happened to Hal Finney, so this is certainly real

[nakaone]

Was at "DevCore London" bitcoin conference. Quite some mentions of privacy concerns, more than before as far as I can tell. Surprisingly knowledge of privacy cutting edge technics stops at "coinjoin", even for *very* famous bitcoin devs.

that is actually quite sad - r/bitcoin seems to be a little smarter at this point.

For a variety of reasons monero is the most interesting project besides bitcoin. I still have some doubts, and I definetely do not share ristos idea that real economy usuage does not matter at all. Probably due to this excellent post:

Hello everybody,

I'm pretty new to bitcoin, looked first at it this summer.  I also did some curve fitting to the historical data in log scale.  Of course, one has to be extremely cautious when extrapolating from early price movements, but intuitively the idea that the bitcoin price should "do something" is pretty clear.  I'm cautiously also buying modest amounts of bitcoin... for my retirement in a few decades, based upon similar extrapolations.

When looking at the long term (and not doing day trading), one must always look at the fundamentals.  Now, bitcoin is supposed to be a monetary asset, in the same way as fiat, or as physical gold: it doesn't serve any other purpose but as "money", that is, intermediate vector of value.  A monetary asset is in a certain way a "frozen Ponzi scheme" or a "frozen bubble" to some extend in my opinion: the only reason why you give it value today (why you want to spend real effort and other monetary assets on it) is that you believe that someone else will estimate it has value tomorrow, and that you will get something for it in return.
Shares, houses, and other investments also have a part of "monetary asset", but they usually also have another cash flow associated to them, like dividends, rent or usage (you can *live* in a house), so there is a "floor" to their price, which is their cash flow or usage.  Gold has a very limited "usage" in jewels and so on, but is essentially a nearly purely monetary asset.

Now, for a purely monetary asset, its "value" is solely determined by the "quantity theory of money", which states that in steady state:
P x Q = M x V

where P is the price of goods, Q is the quantity of goods bought with the monetary asset, M is the amount of monetary asset, and V is the average velocity of the monetary asset.

The "price of a bitcoin" B is then 1/P, and we have:

B = 1/P = Q / (M x V)

So you can expect the price of a bitcoin to be the amount of stuff (expressed in dollars) divided by the amount of bitcoin in circulation M, and divided by the velocity V.

Now, 1/V is given by the "(harmonic) average holding time" of a bitcoin between two buys, which we can call T.

We hence have:

B = Q x T / M

Or: the market capitalisation is B x M = Q x T

In other words, the market capitalisation is grossly given by the value of all stuff bought with bitcoin, times the (harmonic) average hold time of a bitcoin.

Many expectations of "too the moon" are based upon a similar "holding time" T for fiat and for bitcoin: in that case, the market capitalisation is then comparable to the fraction of the fiat market capitalisation that is done in bitcoin.

If bitcoin becomes a success, in the sense that, world wide, people buy and sell stuff in bitcoin, then this market capitalisation can be potentially huge.  Only in dollars, there are 2 - 10 trillion dollars in circulation.  World wide, the estimate (M2 money) is of the order of 55 trillion.
If bitcoin would take 1% of the world trade, its market cap would be about 550 billion dollars.  If bitcoin doesn't even buy 1% of stuff in the world, then the question can be asked whether it made sense in the first place to consider it as a monetary asset.

That is, under the assumptions of similar average hold times.

So that's about a 100-fold increase in market cap compared to now.

Essentially, this is the "amount of value" one needs bitcoins to have in order to be able to buy all that stuff, and to hold all those coins for a time T.

The crucial point is T: if people would just buy bitcoins (with fiat) to spend them immediately, then T becomes much shorter than the average hold times.  This can pretty much lower the market cap needed to buy all that stuff.  Essentially, if bitcoins are only held "a few seconds" the time to buy them with fiat, and to spend them buying some goods, you see that the market cap of bitcoin would be extremely limited.  If 1% of goods are traded in bitcoin, but bitcoins are held 100 times less long than fiat, then market cap is not going to change !

But bitcoin has promises as a store of value too, so chances are that people will actually hold on bitcoin also as "store of value".  Even more so than to fiat which has a bad reputation as store of value.  That might actually make T *longer* than the T of fiat.

However, for the moment, I have no idea, but Q is pretty low (except maybe on black markets, which do play a role in the early phases of bitcoin).

So why is bitcoin then worth something ?  I think we are still in a hugely speculative phase, where the current price of bitcoin is more the future *expectation* of what its price will be, rather than the actual value in monetary use.  Most people (like me) speculate somehow that bitcoin is going to become a success, and that people will not only use it to buy stuff (Q), but also as a store of value (T).  

This has the potential to put the bitcoin price B pretty high.

But it won't happen overnight.  You are not going to wake up, with people buying suddenly 1% of the world economy in bitcoin.   This is going to be a slow process, and to me, *this* is the fundamental value of bitcoin.   The current prices are short-term effects of traders, and the longer term consists in the long term belief of high bitcoin value, that is, a long term speculation on the value of B, as a function of Q and of T.

It can also be that bitcoin flops.  But for the moment, I'm taking a prudent bet on "to the moon", but over a decade or more.  It would be a nice complement to my retirement.  

However, in my opinion, there's no fundamental which can support a "to the moon and staying there" in the near term: Q is too low for the moment.  For bitcoin to become money, you have to buy a significant part of the world economy with it (1% is a very "significant part").

What is dangerous with curve fitting, is that there will be a transition at some point, from the "speculative" domain where we are in now, to the "monetary domain" when it is really on its monetary fundamentals.  There's no reason why fitting laws on the speculative part should have anything to do with the monetary circumstances.

Nevertheless in the case we see full amageddon here (bitcoin failing at double bottom) I consider moving all my btcs into xmr

[Hueristic]

Great post. I agree with everything that i know enough about to comment on. Though we might be pleasantly surprised. Especially if there is a catalyzing event such as people being kidnapped by the state as a result of block chain analysis.

Wow. Is that something that big bitcoin holders actually fear ?

I would think they would fear the day it loses all fungibility. The day when LEA start seizing coins for any previous iteration they were connected to.

[Johnny Mnemonic]

This is the potential. The potential is not to beat DRK or beat BTC. It is to become free of debt money slavery, together.

I don't think we'll ever be free of debt money slavery. What will stop banks from issuing "federally insured" certificates using Monero as lending leverage?

It's still not a waste of time, however, because with crypto at least we control the narrative, and the powers that be can't confiscate our wealth unless we opt-in to their system. Many of us will opt-in, unfortunately, because they will provide compelling reasons to do so. Only a small percentage of us will be "free", and it will come at a significant cost.

[smooth]

This is the potential. The potential is not to beat DRK or beat BTC. It is to become free of debt money slavery, together.

I don't think we'll ever be free of debt money slavery. What will stop banks from issuing "federally insured" certificates using Monero as lending leverage?

The only thing that effectively stops it is cryptocurrencies being useful and efficient for commerce. Then you get an application of reverse Gresham's Law where the softer money is rejected by the market.

[rpietila]

What happened to Hal was truly abominable, he spent his last days fighting off extortion attempts and whatnot.

Gov I suppose?

[sphericon]

it happened to Hal Finney, so this is certainly real

I hope we will see him again.

[farfiman]

it happened to Hal Finney, so this is certainly real

I hope we will see him again.

In the afterlife?

[opennux]

it happened to Hal Finney, so this is certainly real

I hope we will see him again.

In the afterlife?

He got cryo'ed

[farfiman]

it happened to Hal Finney, so this is certainly real

I hope we will see him again.

In the afterlife?

He got cryo'ed

Yes , I know- question still stands. Don't want to go OT so will leave it at that.